"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


Monday, July 28, 2014

Bullish Cattle on Feed Report sends Cattle Futures Lower

Yes, you read that headline correctly - we do not call it the "Cattle on Fade" report for nothing. Cattle launched out of the session open on the heels of a bullish report indicating fewer cattle in cattle country than the market was originally expecting; however, in spite of the friendly report, futures could not hold their gains made early in the session as sellers began showing up.

Simply put, the supply shortage of cattle is not "new" news. We all have known about it for some time now. It is a given that we are going to be tight on supplies for a while into the future. What is also a given is the fact that many traders are doubting the ability of beef demand to sustain itself given the record high prices for beef. Any of you who do the shopping know full well what I am talking about if you have taken a recent trip to the meat counter.

After plunging earlier this month, cattle regained all of those losses and then some after beef prices continued working higher reaching new all-time highs day after day and surprising the trade. Apparently grocers have been able to move the stuff even after passing on the big jump in wholesale prices to the consumer. However, the market appears to be re-evaluating beef demand given the time of the year and the continued surge higher. At some point the consumer is going to balk at paying these kinds of prices. When they do, traders fear that cattle prices could take a dive.

This uptrend has been surprisingly strong however meaning that the volatility can be expected until one view or the other is confirmed.

Here is a look at the chart to note the price action. The uptrend remains very much intact but today's response to the bullish COF report is a warning sign.

Shifting gears to the grains, and particularly to the beans - Bulls are talking up increasing demand for beans, especially from China for the new marketing year, as reason that prices have fallen far enough for now. Also, the usual ( we get this talk every time, every year without fail ) hot, dry weather for August has some shorts covering positions and waiting and watching to see what the longer range forecasts might show for the upcoming month. Beans are typically made in August so any change to hot, dry weather will bring some weather premium back into the beans although my view is that they already have a weather premium in them at current levels. We'll see.

What is really at work here is the lack of aggressive selling the past few sessions, unlike that which we have seen over the last few weeks more than anything. Some consolidation is therefore due while the market adjusts to the new and lower price level to build some sort of base. Traders will be closely watching the weekly conditions report on Mondays as we move forward to see if there is indeed any weather-related stress for the beans or if it is just the usual chatter stirred up by the bulls to try to salvage what has been a horrible last few weeks for them. In actuality, some heat for the beans will be beneficial provided that we do not see any lack of rainfall extended out beyond more than a week or so.

My view is that foreign buyers of US beans are taking some JUST IN CASE, the forecasts change for the worst. They want to get some needs covered. We will be approaching harvest in the Southern part of the US very soon and that is going to bring some new crop supplies into the pipeline. If these foreign buyers get the sense that any weather scares are overblown, they will back away from the market and wait for lower prices.

Corn is being dragged higher by the beans if you want my honest opinion although bulls are talking increasing demand at these lower prices also. Short covering among speculators is behind today's gains.

Not much to say on gold - even with the slightly weaker dollar it is struggling to do much of anything. As said in previous posts - gold is boring right now and a waste of time until it decides to make a strong move in one direction or the other. For the time being it is just being run back and forth with no clear direction outside of the shortest of term charts.


  1. "Stay in the system?"
    GDXJ up 40% YTD.
    DOW up a couple % YTD.
    Nasdaq up a few.
    S&P a few more, about 6% YTD.

    The reality is that the general stock market has had a very narrow range of stocks going up. The Russel has been dropping.

    Not making any predictions, just some facts.

    1. Another 100% and the average pensioner that gots and took certificates will break even.

      That excludes general jim who sold millions and millions of shares in his trx junior that does not explore does not receive royalties does not mine and has no commercially viable resources.

      Just stating the facts.

    2. Steins; I know what you are saying, but I just can not feature 1200 on the weekly charts as being anything more than just a short term double top; we are basically sideways for 7 months now and will probably resolve to the upside; always be careful of August action

  2. Hi Dan is there somewhere I can see the upcoming reports listed so it doesnt catch me by surprise?

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  4. Gold’s strong season is just getting underway, with this metal’s summer-doldrums seasonal low in place. The past couple months’ stiff headwinds are starting to shift to fierce tailwinds, thanks to Asian demand ramping up heading into autumn. Gold’s pronounced seasonality is very important for all investors and speculators to understand, as today’s inflection point is a very bullish omen for this still-unloved asset. Adam Hamilton.


    1. seasons do not matter anymore for most mkts

    2. Dario, you are just another parasite and why do you not take your own head and your sorry site and stick them both where the sun does not shine? Clown and donkey!!

    3. People like you than don't have the intellect to post a reasonable comment and have a healthy conversation are not worth it of arguing with. If your mind triggers insecurities and see the only reality that is a fixated on a mind that cannot see beyond its own limitations and insecurities. People like you is part of the problem not the solution, that is why we live in such us evil times, because of ignorant people like you.

    4. I can tell by your unstable emotions that for sure you trade with them. I am sure you are just flat broke and trying to clean your wounds slashing ignorance.

    5. ever think of English lessons?

  5. Dan, you baffle me, really you do! You remark that "Gold is boring right now" when it would have been just as easy to dress that observation in vapid flowery language and note instead that "gold and silver have been climbing the proverbial ‘wall of worry’ that is the characteristic of all new bull markets.” which surely sounds far more encouraging and comforting? There is not enough purple prose and florid hyperbole in the World these days, I am sure you would agree, and short of writing your blog in Shakespearean iambic pentameter and rhyming couplets, I think the least you could do is interpose a few unqualified adjectives or baseless speculation, no?

    You also seem to overlook that "The plain fact [is] that gold and silver are undervalued, and consequently the tide already has turned in their favor. The uptrend in gold and silver has now been underway for 13 months". which, I trust you will agree, is something of an oversight and a great disservice to us lesser mortals who, when looking at either the charts or our trading accounts, don't see it that way, quite frankly

    more in the last paragraph at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/7/28_Turk_-_Expect_A_Wild_Trading_Week_In_The_Gold_%26_Silver_Markets.html where you will also learn that recent "dips were the result of price manipulation by the central planners and their allies who pile on the short side by selling as much paper gold and paper silver as they need to stop precious metal prices from climbing"

    N.B. Thursday this week will be 6 weeks to the day since Turk J famously forecast (on June 19th) that Silver would hit $50 within 6 weeks: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/6/19_Man_Who_Predicted_Short_Squeeze_Says_Silver_To_Skyrocket.html On that date Silver closed at $20.79, and as I write it is trading at $20.57, which only goes to show what a massive "coiled spring" we have under this market, which will, no doubt, skyrocket up those meager $30 just in time to save the Big Man's ego. Or not, as the case may be

    1. PostColonial;

      Methinks that thou dost protest too much! :o)

      Yeah, if thou hadst suffered the slings and arrows of outrageous fortune a while longer, thou wouldst surely have borne witness that gold and silver art but a walking shadow; poor players, that strut and fret their hour upon the stage and then are heard of no more.

      Truly methinks however that those who regale us with such profundities that we read at KWN are telling tales of idiots, full of sound and fury, signifying NOTHING!


    2. touche!

      I doff my hatte.Old Buddy


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